To get a VA loan, eligible veterans, active-duty service members, and some surviving spouses must obtain a Certificate of Eligibility (COE) from the U.S. Department of Veterans Affairs.
A VA home loan is a mortgage insured against default by the United States Department of Veterans Affairs. The VA loans program is designed to assist our most deserving citizens to obtain home financing, at competitive interest rates, while requiring no down payment or private mortgage insurance (PMI).
If you're wondering what are the VA loan requirements or how to get a VA loan, follow along as Benzinga breaks down this important topic.
VA Loans: An Overview
VA home loans can be used to:
- Buy a home
- Build a home
- Simultaneously purchase and improve a home
- Improve a home by installing energy-related features or making energy-efficient improvements
- Buy a manufactured home and/or lot
- To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
- To refinance an existing mortgage loan or other indebtedness secured by a lien a residence occupied by the veteran as a home
Your length of service or service commitment, duty status, and character of service determine your eligibility for specific home loan benefits (see applicable eligibility requirements). VA-guaranteed loans are eligible for a home for your occupancy or a spouse and/or dependent (for active duty service members). To be eligible, you must have satisfactory credit and income to meet the expected monthly obligations, and a valid Certificate of Eligibility (COE).
Eligibility Requirements
- Veteran, current or former National Guard or Reserve member who has been activated. Federal active service - requires a copy of a DD Form 214 showing the character of service and the narrative reason for separation
- Active Duty Servicemember or current National Guard or Reserve member who has never been in Federal active service- A current statement of service signed by (or by the direction of) the adjutant, personnel office, or commander of the unit or higher headquarters. It must show your full name, social security number, date of birth, entry date on active duty the duration of any lost time, and the name of the command providing the information.
- Discharged member of the National Guard who has never been activated for Federal active service - NGB Form 22, Report of Separation and Record of Service, for each period of National Guard Service -AND- NGB Form 23, Retirement Points Accounting, and proof of the character of service.
- Discharged member of the Selected Reserve who has never been activated for Federal active service - a copy of your latest annual retirement points statement and evidence of honorable service.
- Surviving Spouse in Receipt of DIC (Dependency & Indemnity Compensation) benefits - Submit VA Form 26-1817 and veteran’s DD 214 (if available). Include the veteran’s and surviving spouse’s social security number on the 26-1817 form.
Surviving Spouse not receiving DIC benefits - submit the following to the appropriate Compensation and Pension office; VA Form 21P-534-ARE, DD 214 (if available), Marriage License, Death Certificate or DD Form 1300 - Report of Casualty. Find the mailing address for your state to send the VA 21-534 at PMC States.
Applying for a Certificate of Eligibility
After gathering all the necessary documentation, you can apply for a Certificate of Eligibility (COE) a number of different ways:
- Servicemembers, Veterans, and National Guard and Reserve Members
- Apply online with the eBenefit portal.
- Apply through your lender. Most lenders have access to the system, an Internet-based application can establish eligibility and issue a COE. Not all cases can be processed this way, the VA must have sufficient data on record.
- Apply by Mail. Use VA form 26-1817, Request for Certification of Eligibility.
- Surviving Spouses
Take a VA Form 26-1817 to the lender for processing or mail the 26-1817 and the DD 214 (if available) to the designated address.
Loan Criteria
Perhaps the greatest advantage of VA home financing is the ability to avoid mortgage insurance while requiring no down payment at the same time. In fact, loans can be granted up to 103.3% Loan to Value (LTV) is the lessor of the sales price/ appraised value divided by the loan amount expressed as a percentage), meaning that borrowers can borrow more than 100% of the value of their home.
Though VA loans do not require VA loan mortgage insurance, they do carry a funding fee of 3.3% of the loan amount. The fee is financeable at a borrower’s request, which is the purpose of allowing eligible veterans to borrow 3.3% more than their home’s value.
Disabled veterans are exempt from the funding fee based on their percentage of disability. Bear in mind, with all mortgages there are closing costs to consider aside from your down payment, like origination fees, title fees, escrow deposits, etc. Unless covered using existing equity or by seller concessions, these costs will have to be paid by borrowers at the closing table.
Among the VA loan house requirements are that you can afford the monthly payment. Depending on the VA loan rates today, your mortgage can vary. The best way to determine what yours will be is to use a VA home loan mortgage calculator.
Required Documentation
- Income documentation: W2s & pay stubs (if hourly/ salary), 2 years tax returns (if commission/ self employed)
- Asset documentation (itemized statements for savings, checking, or investment accounts)
- Property sales contract
- DD214 or Certification of Guarantee
- Certificate of Eligibility
Where to Apply
The Department of Veterans Affairs does not originate VA loans they simply write the program guidelines. To obtain a VA mortgage, you will need to find a VA approved lender.
Smaller community or regional banks may also offer VA loans so checking websites or placing a phone call can determine if they offer a VA loan product. When speaking to VA lenders, it is best to have all the necessary documentation ready.
This will give you the quickest and most accurate gauge of your qualifications. If you can’t garner the necessary docs beforehand, not to worry. Most loan officers should be able to point you in the right direction.
Find the Best VA Home Loans with Benzinga's Top Lenders
Explore our selection of top VA loan providers and discover which one suits your needs the most.
Financing Your Dream Home
Understanding the ins and outs of how to get a VA loan is crucial for veterans and active-duty service members looking to buy a home. By following the necessary steps and meeting the requirements set forth by the Department of Veterans Affairs, you can benefit from lower interest rates, no down payment requirements, and no private mortgage insurance.
Frequently Asked Questions
How do I get pre-approved?
To apply for a loan, submit an application along with two years of tax returns, W-2s, a recent pay stub, and two months of bank statements. The lender will also check your credit report. Approval or denial takes 2-7 days after submission.
How much interest will I pay?
Interest on a loan depends on the interest rate, the amount borrowed, and the loan term. For a $208,800 loan at a 3.62% rate over 30 years, you would pay $133,793.14 in interest with monthly payments of $951.65.
How much should I save for a down payment?
Lenders typically recommend saving at least 20% for a home down payment to lower monthly payments and interest costs. If 20% can’t be saved, various homebuyer programs and assistance options are available, particularly for first-time buyers.
